1. Technical Field
This invention relates generally to private equity and debt markets, and more particularly to managing, tracking and distributing resource consumers' account, company, and relationship information in such markets.
2. Discussion of Prior Art
In the equity and debt funding business a “resource provider” (provider) is a party, who may be a venture capitalist, a bank, an accounting firm, a law firm or other business partner, that provides capital, assets or services. A “resource consumer” (consumer) is a party, typically an emerging growth company, that is seeking these resources. Resource providers and consumers agree what information the consumers are to deliver in exchange for being considered to receive resources from the providers. However, the formatting of information and the delivery mechanisms are not standardized. Currently, consumers may deliver information via ground mail, e-mail, online forms, FAX, teletext, etc. The current methods and processes typically require duplicative and costly data entry by both providers and consumer. In order to create more semi-homogenized data, providers currently must collect, re-enter, and format data submitted by consumers. The problem is illustrated in FIG. 1. Consumers often receive resources from multiple providers. Consumers receiving duplicative information requests from different resource providers must duplicate the efforts of producing and delivering the same information to the different resource providers. Current methods do not allow a single consumer to efficiently distribute the same digital information and updates to multiple providers using a single platform and/or user interface. Despite the growing demand for more digital information, attempts to automate the digital distribution of consumer information have failed. This is largely due to the fact that individual software or system deployments by providers currently require consumers to reenter and/or resubmit their same data into multiple stand-alone systems that do not share information. This creates additional time-consuming and expensive work for the consumers who do not have the resources needed to enter and re-enter the same data multiple times in order to satisfy their providers. It is currently difficult to share and distribute consumer information among providers because 1) the data is not semi-homogeneous, 2) providers often have additional and special information requests, and 3) no platform or neutral third party administrator exists to regulate and control the sharing of data submitted by consumers among and between interested parties. Thus, there is a growing need and strong desire among providers to obtain more semi-homogeneous and digital data directly from consumers.
There is also a growing demand for more strict controls over the tracking of submitted data and changes made to data. Companies, investment mangers, plan sponsors, and fiduciaries of all types are increasingly being required to demonstrate higher levels of fiduciary oversight and control of such information, or else risk liability to criminal and civil penalties.
Previous methods of obtaining and managing consumer information have included: external research; proprietary information databases or exchanges (e.g., M&A transactions, IPO data, deal listings, etc.); portals (e.g., MSN, Yahoo); collaboration tools (e.g., chat boards); secure file transfer and management services; virtual data rooms; work flow products; contact management platforms (e.g., Outlook, Onyx); customer and sales force relationship management tools; and back-end systems (e.g., SAP, Peoplesoft). These previous methods do not provide sufficient controls to adequately track and manage the submissions and changes made by either or both providers and consumers. Existing methods and solutions do not allow providers and other interested parties to efficiently organize and track specific categories or collections of profiles in real-time. Providers and others typically need to track groups of profiles by category. In addition, providers must maintain accurate records tracking how they have supervised these various categories of profiles. To address these challenges, many providers and others must first dedicate resources to collect, update, organize the underlying consumer profile data and then must spend additional dollars to manually organize and update the summary files and documents that they use to track and demonstrate oversight of the various categories or groups of consumer profiles.
Public equity and debt market needs are addressed by services such as Edgar, Hoovers, Bloomberg, and Yahoo, whose on-line sites post information for retrieval, sometimes for a fee, through web browsers. However, these public market solutions do not address business processes by which private equity firms and debt providers manage and control consumer information on a relationship-by-relationship basis. For example, these solutions do not align data collection and management responsibilities in an efficient and auditable manner. In short, there is not a comparable “private equity” or debt marketplace solution to capture, collect, organize, maintain, monitor, and control access to information flowing into a provider organization. Instead, previous solutions often contain secondary data resulting from efforts of individuals who research and collect information on a company (aka consumer), e.g., Venture Source. Secondary data is not reliable for evaluating or managing the performance of prospect and/or portfolio of relationships. The Sarbanes-Oxley Act and other acts require greater levels of fiduciary oversight for alternative asset classes, e.g., venture capital, hedge funds, private equity, etc. ERISA standards require managers to demonstrate adequate fiduciary oversight of capital deployed in private equity investment vehicles. Failure to exercise such oversight could incur criminal and civil penalties.
Finally, providers must meet the above requirements with reduced budgets and available resources. A recent study by the Private Equity Industry Guidelines Group (PEIGG) noted that the available investment management staffs at general partner firms, i.e. providers, are often small. These factors point to a growing need for automation to help providers collect, input, track, manage and distribute consumer data. The PEIGG report further highlighted the fact that the investors to whom providers must report to are demanding access to greater amounts of digital information rather physical hard copies.
There remains therefore a need for a system which will enable senior providers to free up more time to search for, identify, and qualify potential prospects, to exercise greater levels of due diligence on prospective and existing portfolio companies, and to do so with fewer management dollars.